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CHAPTER
1
Managing Age in Asia and Europe: An Introduction
Matt Flynn, Yuxin Li and Anthony Chiva
ABSTRACT
There has been a growing interest amongst academics, researchers employers and governments/policymakers on ageing workplaces and workforces. As populations age and pension ages rise, older workers are finding themselves having to delay or postpone their retirement and organisations are looking for ways to enable them to do so in sustainable work. Workplace ageing is impacting both European and Asian societies and governments and employers are taking nationally specific approaches to age-related human resource management, social and public policies. In Europe, national governments are being led by the European Union in developing social and public policies to support older workers in maintaining employment through lifelong learning, flexible working, health management and job rotation. Tiger economies have focused on the âworking pensionerâ pension rules which enable older workers to phase into retirement. China is facing rapid ageing but still maintains early retirement as a way to help older workers move out of physically and mentally demanding work. In addition to providing an outline for the remainder of the book, we also present a survey of older employees undertaken in the United Kingdom and Hong Kong which explores experiences in work, workplace relationships, skills and retirement plans. The survey is used as a common resource for the remaining chapters.
Keywords: Workplace ageing; cross-national comparison; welfare states; institutionalism; human resource management
Introduction
Ageing workforces are affecting labour markets in most parts of the world, providing challenges to employers, governments and other stakeholders such as policy makers. It has been recognised by international institutions like the United Nations (UN) (UN Political Declaration, 2002), International Labour Organization (ILO) (ILO, 2009) and international financial institutions (World Bank, 1994) that employers globally will need to put in place human resource management (HRM) policies to encourage and facilitate longer working lives. Within the UN International Plan of Action on Ageing, there are commitments from national governments to support older workers in terms of learning and development; having a voice on workplace issues; balancing work and non-work activities including caring for relatives; and having opportunities to take part in all forms of economic and non-academic activity including self-employment. ILO Recommendation 162 was passed as far back as 1980 to ensure the equal treatment of workers regardless of age and to protect older workers in hazardous working conditions.
There are four reasons why work is central to managing ageing demographics. Firstly, as elderly populations increase, there are concerns over the sustainability of pension schemes and affordability of retirement. Twenty-seven of the thirty-seven OECD governments are reforming their state pension systems in order to either improve financial sustainability (e.g. raising pension ages or reducing entitlements); reduce pension inequalities (e.g. means testing benefits or introducing universal pension benefits) or both (Bongaarts, 2016). Governments are increasingly interested in âworking pensionerâ policies such as those in place in Japan which expand the rights of pensioners to maintain or return to work (Higo & Klassen, 2017). Secondly, whilst the elderly are less likely to be in be in poverty than younger people, falling into poverty is more likely to be permanent, especially in countries which lack comprehensive social welfare states which can support retired people. Sustainable work (i.e. economic activity which does not have a damaging impact on health and well-being) is therefore a way in which older people can avoid late-life poverty, although many also rely on families for support. Old-age poverty can be particularly acute amongst groups of people who have historically experienced precarious work, interrupted careers and lack of access to pension savings (Zaidi, Grech, & Fuchs, 2006). These include women (TUC, 2014), low-skilled workers (Lain, 2012) and economic migrants (Rhee, Chi, & Yi, 2013).
Thirdly, whilst longevity has been increasing globally, there remain significant inequalities as measured according to disability-free longevity. Within Europe, the difference is approximately 13 years between the healthiest (Denmark) and least healthy (Estonia) countries (Jagger et al., 2008). Globally, 43 countries now have employment regulations which prohibit workplace age discrimination (Kapp, 2013) and European Union employer and union federations have recently agreed a framework for promoting older workersâ economic activity (ETUC, 2017). Nevertheless, ageism remains a significant factor leading to early labour market exit as employers perceive older people to be more expensive and less productive than younger ones (Collien, Sieben, & MĂźller-Camen, 2016). As older workers are pushed out of sustainable work, they are pushed either into physically demanding and/or precarious work or premature retirement (Kalleberg, 2009). Work is therefore a factor contributing to later life social inequalities or what Titmuss called âtwo nationsâ (McNair, Flynn, Owen, Humphreys, & Woodfield, 2004). Fourthly, older workforce participation is increasingly being recognised as important to economic development, especially in countries with stagnant or declining populations (e.g. Germany; Hofäcker & Naumann, 2015); low fertility rates (e.g. Japan; Higo & Yamada, 2009 and Hong Kong; Flynn, 2016) and/or chronic skills shortages (e.g. the United Kingdom; Winterbotham, 2014). Whilst in the past, governments had pursued social welfare policies favouring the early retirement of older workers in order to create work opportunities for younger ones (Banks, Blundell, Bozio, & Emmerson, 2010), there is now a recognition by national governments that extended working lives is consistent with economic growth.
Although ageing is a widely recognised issue facing European and North American workplaces, there are also significant challenges facing Asian businesses. In 2016, for example, China passed the âdemographic windowâ, after which the working age population will start to decline as a proportion of the overall population (Banister, Bloom, & Rosenberg, 2012), and according to the Chinese governmentâs Development Research Foundation (Smith, Strauss, & Zhao, 2014), raising participation rates of older workers is the only intervention which will have an immediate impact on the labour market so as to mitigate the impact of the reduction in the number of younger people entering the workforce. Further, with healthy and wealthy populations, the âTigerâ economies are amongst the oldest in the World, with Hong Kong, South Korea and Singapore joining Japan as amongst the 20 populations worldwide with a life expectancy above 80 (Chow-Tan, Bosworth, & Kawai, 2015). Whilst there has been literature exploring work, age and retirement in Europe and Asia separately, there has been little insight into the extent to which and how age management HRM, public and social policies are developed and implemented on the two continents and how they have shaped societies. As populations age, there have been calls from academics (e.g. Taylor, Loretto, Marshall, Earl, & Phillipson, 2016) and practitioners (Cridland, 2016) alike for more international sharing of experiences of workplace ageing. This edited book aims to make a contribution by exploring ageing workforce issues within European and Asian contexts. We will briefly set out the context of workforce ageing in China, Europe and the Tiger economies followed by an outline of the rest of the book.
Ageing Workplaces in China
Increased longevity coupled with decreased fertility rates as a consequence of the One Child Policy have led to a rapid ageing process in China and at an accelerating pace. Population ageing in China has not only resulted in a large proportion of the elderly but also significantly decreased young workforce. Benefiting from its large demographic dividend, China experienced unprecedentedly high economic growth in the past two decades. However this will change as the labour supply reduces and dependency ratio increases. Unlike Western countries, China will step into an aged society characterised with âgetting old before getting richâ (Cai & Wang, 2006). Serious concerns about the economic and social consequences of the ageing population have been raised and population ageing poses some daunting economic and policy challenges to the Chinese government. Public and private policy reforms have been proposed which include changes in retirement policies; wider coverage of pensions; better provision of long-term care services and changes in human resource practices of businesses. The recent new Two Child Policy is one of these responses from the government to tackle population ageing. However, without a deep and fundamental reform, it is unlikely to be sufficient to tackle the challenges posed by a large old population like China.
The retirement policy in China can be traced back to 1951. It set the compulsory retirement age for men at 60 and for women at 50 (55 for women of senior government positions), both under the condition that they have worked for 25 years in total and in current job for 5 years (Manion, 2014). For certain occupations which pose serious health hazards, workers can retire five years before the compulsory retirement age. Reforms have been made since then on the retirement policy. However, the compulsory retirement age has remained the same for a long time. In 1983, the government extended the retirement age from one to ten years for researchers, professors and senior experts, that is, those whose expertise are highly demanded by the economic development of the country. Women, in particular, benefited from this change as more joined the labour market and higher education. Retirement age for others have been almost the same up to now, although the average life expectancy has increased from 40 and 42 for men and women in 1949 to 74 and 77, respectively, in 2016.
The economic structure in China has also changed. In 1949 when the Peopleâs Republic of China was founded, agriculture was the main sector and economic development was way behind other Western countries. The main industrial sector was raw material industry which is labour intensive and requires a large number of younger workers. Thus, a younger retirement age for men and women could guarantee a continuous supply of younger workers into such industries. However, with the present much-diversified industrial structure, early exit no longer conforms to the economic requirements of present China. Between 1995 and 1997, the government expenditure on early retirement pensions took a major proportion in total pensions in 13 provinces in China, such as Shandong, Shanghai and Guangdong which reported 16.5%, 25.2% and 27.7%, respectively (Guo, 2005). Until now, government spending on early retirement pensions still takes a significant proportion of total pensions which poses a large burden on government finance.
In the Third Plenary Session of the 18th Central Committee of the Communist Party of China in 2013, the government specifically showcased the plan to develop phased retirement strategies. However, such reforms are fraught with political difficulties and complexity in structuring early retirements, and it has proven difficult for retirement policies to take place. Researchers have made various investigations into the influencing factors of early retirement, but consensus could not be reached. What has been agreed upon is that the vast difference in the factors determining early retirement behaviour in workplaces of different natures. For example, workers of public sectors are not willing to retire early due to better welfare and work conditions in public institutions and their low chances of getting re-employed elsewhere. Other individual characteristics, such as gender, education and health status, have also been proved to have significant influences on workersâ early retirement decisions.
Although theoretically there are possibilities and potentials for reforms of the Chinese retirement policy, in reality, there is not much room for optimism. Long history and serious phenomenon of early retirements, as well as people who enjoy benefits from early exits and who are also unwilling to accept changes make it much more difficult to extend working life. Zhang and Zhao (2014) compared the employment rate of people between 55 and 65 in 1990 and 2010, and found that the employment rate dropped by 2% points, indicating that the proportion of early retirement increased during these 20 years. Legitimate early retirement defines conditions for people conducting specific dangerous jobs or people with disability of serious illness to take early retirement, however, such policies are often misused and provide an early exit routes for a large number of people (Zhao & Xu, 2001). Businesses and individuals take early retirements mostly for their own benefits with only a few who retire for health reasons. During the reform of state-owned enterprises to private-owned enterprises in the 1990s, firms were the main drivers of early retirement. Inefficient and heavily burdened enterprises encouraged early retirement in order to reduce their workforce to increase productivity (Guo, 2005). Individual factors, on the other hand, have overtaken firms and become the main reasons in recent years. For example, for many workers, early retirement will not reduce their pensions dramatically and thus choose to exit labour market early to enjoy life (Peng, 2012; Yang, 2013a, 2013b). For others, early retirements do not mean exiting labour market. Instead, they receive more income from being re-employed elsewhere or self-employed, and this takes over 33% of the total retirements (Jiang, 2009). Overall, early retirement presents various forms in China and destroys the financial integrity of pension and health-care systems. Thus understanding the determinants of them can help to make effective policies tackling the challenges from both ageing and financial burdens.
Population ageing raises serious concerns about the economic security of older people, health spending, labour supply, savings and growth of the economy. Due to an uneven and incomplete social security system in China, this issue appears to be more pressing. Pension coverage, although increased, ...
